San Francisco must end its self-inflicted housing woes

1028 Market St., San Francisco, has become a haven for drug-dealing instead of homes for 186 families as planned.

Photo: Liz Hafalia / The Chronicle August 2018 file photo

The building at 1028 Market St. is in the heart of San Francisco’s Mid-Market neighborhood. Once home to the temporary public marketplace known as the Hall, it has reverted to being a venue for drug dealers and hangers-on. In a different city, one whose rhetoric about addressing its housing crisis was matched by actions, 1028 Market would be nearing completion as a 13-story, 186-unit apartment building. Its 9,600 square feet of new ground floor retail would soon be revitalizing long-distressed blocks of Mid-Market and the Tenderloin.

But 1028 Market was proposed in San Francisco, whose glacial and uncertain housing approval process has left the project in limbo. Despite its housing affordability crisis and jobs/housing imbalance, San Francisco maintains a housing approval process designed to either delay or kill projects.

After buying 1028 Market in June 2013, the developers submitted their project application in March 2014. Nearly three years passed before the project reached the Planning Commission for approval. Because it takes another year to obtain necessary site permits, 1028 Market — which faced no opposition — would have taken four years from application to groundbreaking. By then it was too late; rising construction costs meant that 1028 Market’s financing no longer penciled out (and this with an inclusionary housing requirement of 13.4 percent compared with the current 20 percent requirement).

The Chronicle’s J.K. Dineen wrote that the city’s new market-rate housing will “slow to a trickle” in 2019 because of “higher construction costs, escalating fees, a softening market and increased interest rates.” But all of these factors are worsened by the city’s slow approval process. And, unlike other costs, expenses caused by approval delays are entirely within San Francisco’s power to change — all it takes is the political will.

Why does a city that desperately needs more housing undermine this goal?

Powerful interest groups favor housing-approval delays. Among them are homeowner groups granted multiple opportunities for “input” on proposed new housing as well as rights to appeal when projects are approved.

There are also historic preservation advocates who have secured resources for the Planning Department’s historic preservation section to protect historic structures impacted by new housing. But this worthy goal should not sacrifice new housing to “preserve” long abandoned and severely deteriorated buildings, such as the Hollywood Billiards site at 1028 Market. Its proposed demolition initiated the Planning Department’s 490-page analysis and required the project to undertake a costly, delay-causing full environmental impact report.

Approval delays are also backed by some nonprofit groups that view private housing development as entitling them or their designees — as the voices for “the community” — to financial benefits. While developers have long negotiated community benefit agreements, San Francisco supervisors now commonly tell planning commissioners to delay or reject projects until the builder satisfies all of these “community” demands. This occurs even when the benefits demanded do not expand affordable housing.

I was recently in Seattle to talk about my new book on how progressive cities maintain exclusive and elitist land use policies. The Seattle Planning Commission had just released a powerful new report, “Neighborhoods for All: Expanding Housing Opportunity in Seattle’s Single-Family Zones,” calling for increasing density in all neighborhoods. Seattle doesn’t give political appointees on a planning commission the power to approve projects; Seattle’s commission instead spends its time planning.

Seattle builds twice as much housing as San Francisco, and its approval process is twice as fast.

Here’s what San Francisco can do:

•Limit Planning Commission review to new projects requiring conditional use applications (i.e., the large projects).

•Allow builders to pay for extra staff to process applications so work on their projects begins immediately.

•Eliminate the Board of Supervisors’ power to overturn any Planning Commission approvals.

A city committed to addressing its housing “crisis” must take such actions.

The California Legislature’s proposed SB50, which would increase density along transit corridors and legalize apartments in single-family home neighborhoods, would greatly expand San Francisco’s housing options. But rezoning makes a difference only if housing gets built. And this will not happen as long as small builders will not invest under San Francisco’s approval process.

In 2018, San Francisco added 6,885 new residents but only 2,263 multifamily housing units, the lowest number since 2012. And while 4,700 units are expected to arrive in 2019, only 314 will be new condos. Many are ultra-luxury because only they can survive the delays that price out more affordable new homes. Past experience shows that the lack of affordable new condos pushes buyers into instead purchasing tenancies in common in formerly rent-controlled buildings whose long-term tenants were evicted under the state’s Ellis Act. That’s why the lack of newly built small condo buildings not only hurts buyers but puts existing tenants more at risk.

San Francisco must build multiunit buildings in all neighborhoods to best protect tenants and expand long-term affordability. This requires major changes to its housing approval process.